November 29, 2020

Volume X, Number 334


7 Key Elements of Effective Terms of Use: Amendment

In earlier posts in this series, we discussed the first six essential elements of website Terms of Use or Terms of Service (TOS), a website operator's contract with its website users.  The next and final key element of such contracts is:

7.  Amendment.  A website operator must have the ability to amend Terms of Use to accomodate changes in the law and business.  However, such amendments - like the original Terms of Use - must be supported by the assent of the website user.

Mutual assent is the foundation of every express contract and amendment, whether it is formed offline or online.  While parties to an offline contract may put signatures to paper to demonstrate their mutual assent to the terms of the contract, online contracts  require a different means of signalling assent.

Online contracts fall into three categories, based on how the user indicates his or her asset to the terms and conditions proposed by the website operator:  (1) clickwrap agreements; (2) shrinkwrap agreements; and (3) browsewrap agreements.  Each category of online agreements is treated differently by the courts.

Clickwrap Agreements

Often, the user of a website is asked to read a set of terms and conditions governing use of the website and then asked to expressly agree to those terms and conditions before making a purchase or obtaining the service offered by the website.  Agreements entered into in this fashion are referred to as "clickwrap" agreements because the user typically indicates his or her agreement to the terms and conditions by clicking a button, hyperlink, or checkbox marked "I agree."  Clickwrap agreements are generally enforceable.

Shrinkwrap Agreements

Shrinkwrap agreements are named for the license agreements contained in the packaging of commercial software products. Online, these contracts provide notice that continued use of the website or certain other conduct will constitute the user's agreement to the terms and conditions proposed by the website operator.  Such agreements are enforceable, if proper notice is provided to the website user. 

Browsewrap Agreements

In some instances, websites contain terms and conditions which purport to bind any user who visits the website, without any other manifestation of affirmative agreement by the visitor. While notice of the terms and conditions usually appears on the website, the user is not required to view the provisions of the "agreement" or to undertake any affirmative action indicating an agreement to those terms. Most courts are hesitant to enforce these agreements.

The best practice is to have a website’s Terms of Use and its amendments presented as a clickwrap agreement, such that a user must click to indicate his or her agreement.  In this way, the website operator has the greatest chance of creating an enforceable agreement.

This is the last in a series of seven posts describing the seven key elements of effective website Terms of Use.  When preparing Terms of Use or any other contract, one should seek the advice of a competent, properly-licensed attorney.  The failure to do so may result in Terms of Use that provide no protection or, worst yet, may create legal exposure where none previously existed.

Click here for Part 1.

Click here for Part 2.

Click here for Part 3.

Click here for Part 4.

Click here for Part 5.

Click here for Part 6.

© 2020 Odin, Feldman & Pittleman, P.C.National Law Review, Volume IV, Number 296



About this Author

Jonathan D. Frieden, Odin Feldman Law Firm, E-commerce Attorney

A degree in systems engineering and a background in computer coding have helped inform Jon Frieden’s approach to successfully handling a broad range of matters for his technology clients. As a self-described “early adopter,” Jon was one of the first attorneys in Northern Virginia to focus on Internet law and e-commerce.

With a practice centered on complex Internet- and technology-related commercial disputes and transactions, Jon brings a two-pronged approach to helping clients achieve success. Jon’s litigation experience helps structure deals for his clients that avoid potential...